The plan is to grow 80-90% year-on-year for the next two-three years, says Taneja
Flush with funds after raising $45 million from Sequoia Capital India and other investors, online beauty marketplace Purplle aims to breach the Rs 1,000 crore revenue mark in the next four-five years. Manish Taneja tells Devika Singh that launching more private labels, creating an offline presence, and entering new markets are the company’s key focus areas.
Private labels have been instrumental to your growth. Will you be launching more of these as you aim for a larger share in the online beauty market?
Though we are very comfortable with the current mix, wherein 38-40% of our revenue comes from private labels, we want to grow the overall share and, hence, increase the share of our private brands. We have big ambitions, and to fulfil them, we need higher gross margin businesses. These can only be built around private brands, and that’s why we recently forayed into feminine hygiene. As a retailer, our margins are really low. By building a private brand, we can increase our margins by three-four times, and have the ability to spend on marketing.
Besides private brands, we will keep working on areas such as technology and vernacular content. We also plan to enter new countries in South East Asia and the Middle East in the next two years. The plan is to grow 80-90% year-on-year for the next two-three years.
As you go deeper in the country, will you alter the pricing strategy or stick to the mid-premium positioning?
Our ambitions range from masstige to premium, so we will try to cover the entire price spectrum, categories, etc, as we scale up. That said, small towns have money. We have acquired about five million customers till date, and given that about 70% of our sales come from small towns, we can say that small town India can afford these products. But, in the future, if we feel that we are unable to acquire more customers because of our premium pricing, we will make them more affordable. Introducing smaller pack sizes could be one of the possibilities; we have seen brands like Maybelline and Estée Lauder adopt this strategy of late. Most beauty brands are going to small towns and trying to figure out pocket-friendly pricing to acquire these customers.
Purplle acquired a stake in beauty brand Juicy Chemistry last year. Are more acquisitions on the cards?
We made a minority investment in the brand because we wanted to see how the premium space plays out in India. We want to understand the luxury space, the prestige kind, and find out if there is play for Purplle in it. For the time being, we will only wait and watch.
In 2017, you announced an offline foray but are yet to launch retail stores…
We had launched an offline store in 2017, but it did not turn out to be a great experiment, and hence we decided to pause the offline expansion plan. It was a little too early in our journey; we made a bunch of errors in terms of location and the bandwidth available. In 2017, our revenue was around Rs 50 crore. As we are better placed now, we plan to test the format again and launch one or two stores this year. We are also launching our private brands in the offline space. It is one of the focus areas towards which the capital that we have raised will go.
In FY20, you moved away from the inventory-led model. How has that paid off?
It has worked very well. We are still a controlled marketplace, which means that we ship all the inventory to customers through our warehouses. The difference between our earlier model and the current one is that we do not buy the inventory now. It means better working capital as we do not have to make investments in stocking the products. Brands have been supportive of us and have placed their inventory in all our warehouses. We ensure a sound delivery experience to the customer. We do not allow third-party fulfillment. Every product goes through three-four security checks before being dispatched. The faster we deliver products, the better are the chances of retaining the customer. Hence, over the past year, we have opened warehouses in Bengaluru, Hyderabad, Kolkata and Guwahati, besides Mumbai and Gurugram where we were already present.